How did the COVID-19 pandemic affect Benihana's restaurant operations, specifically regarding in-person dining in 2020?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
luding overall economic and industry conditions.
Health and Safety
The COVID-19 pandemic has had, and is expected to continue to have, a significant effect on our restaurant traffic and our business, financial condition and results of operations.
The COVID-19 pandemic has significantly affected on our business and results. Restaurants we own and manage have been subject to significant government-mandated operating restrictions, including temporarily shut down of all in-person dining in 2020. Restrictions eased in late 2020 and through 2021. Although all of our venues have reopened, we expect that our operations will continue to be affected by COVID-19, and those effects may be exacerbated by resurgences and the spread of variants of the coronavirus. It remains difficult to predict the full impact of the COVID-19 pandemic on the broader economy and how consumer behavior may change, and whether such change is temporary or permanent.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the COVID-19 pandemic significantly impacted the company's operations. Specifically, in 2020, restaurants that Benihana owns and manages were subject to government-mandated operating restrictions, which included the temporary shutdown of all in-person dining. While these restrictions eased in late 2020 and throughout 2021, the document indicates that the company expected its operations to continue being affected by COVID-19, potentially exacerbated by resurgences and variants of the coronavirus.
This disruption to in-person dining had a substantial effect on Benihana's revenue. However, the FDD states that all restaurants are currently open for in-person dining. The company incurred $5.5 million in COVID-19 related expenses in 2020. These expenses primarily covered sanitation, supplies, and safety precautions implemented to prevent the spread of COVID-19.
For a prospective franchisee, this highlights the potential risks associated with external factors like pandemics and government regulations. While Benihana has adapted its operations to increase sales and provide a safe environment, the continuation of normal dining operations remains subject to events beyond the company's control. It also demonstrates the importance of adaptability and resilience in the face of unforeseen challenges, as well as the potential for incurring significant costs related to health and safety measures.